The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This guidance note concerns the tax treatment where two or more persons exchange interests in land. Land includes any interest or right over land and so will cover freehold and leasehold interests in land or buildings.
Although this situation is most likely to apply on the breakdown of a marriage (and it is considered in this context in this note), the same treatment applies where exchanges are made between unmarried people, such as siblings or friends.
Under first principles, where interests in land are exchanged by persons other than a married couple / civil partners living together, the transfers would be treated as having been made at market value for capital gains tax (CGT) purposes. This would leave both parties with a CGT liability despite not having received any cash proceeds.
However, there are roll-over relief provisions that allow each person to defer his gain on the disposal of the old interest into the acquisition of the new interest, providing certain conditions are met.
For exchanges prior to 6 April 2010, this relief was given by extra statutory concession (ESC D26). Exchanges which take place on or after 6 April 2010 are covered by the legislative provisions in TCGA 1992, ss 248A–248E.
Stamp duty land tax may be due on the exchange depending on the facts of the situation.
These provisions are important where the divorcing couple jointly own more than one property (eg a buy-to-let portfolio) and need to transfer interests in order to obtain sole ownership.
You may remember that transfers between married couples / civil partners living together are made on a no-gain / no-loss basis for CGT. However, this favourable treatment ends following the tax year of permanent separation, meaning that transfers of chargeable assets for capital gains tax are treated as being made at market value and therefore CGT may be due (see the Inter-spouse transfer guidance note for further details). This applies equally to married couples and civil
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
The substantial shareholding exemption (SSE) provides a complete exemption from the liability to corporation tax on the gains generated from qualifying disposals of shares and interests in shares by qualifying companies. Conversely, if losses are generated by the disposal and the SSE conditions are
Terminal loss relief for trade losses in the final 12 monthsTrading losses incurred by a company in the final 12 months leading up to the discontinuance of trade may be carried back for up to three years from the period beginning immediately before that 12-month period. So if the final accounting
This guidance note explains how to calculate the amount of tax that arises under the lifetime charge. In general terms the lifetime charge will apply to individuals who transfer property into a trust that is subject to the relevant property regime. See the Chargeable transfers and Occasions of
This guidance note provides details of quarterly instalment payments (QIPs) for corporation tax purposes and which companies need to pay their tax liabilities in this manner.Generally, corporation tax is payable nine months and one day after the end of the relevant accounting period. However, large
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.